The Trump Trades: Green and Growing Strong

  • The US Dollar Index hits a fresh year-to-date high above 107.00.
  • Traders await Fed Chairman Powell’s view on December interest rate cut.
  • Republicans secure majority in House, paving the way for Trump’s policies.

In the realm of the Trump trade rally, the US Dollar (USD) continues its upward trajectory, marking five consecutive days of gains. The US Dollar Index (DXY) has soared to its highest level since November 1, 2023, surpassing 107.00. This surge follows reports indicating that Republicans have secured a majority in the House of Representatives, solidifying President-elect Donald Trump’s ability to push through his agenda unimpeded.

As we navigate the financial landscape, keep an eye on key events:

Daily Digest Market Movers: Insights and Analysis

  • Weekly Initial Jobless Claims for November 8 come in lower than expected at 217,000.
  • October Producer Price Index (PPI) data shows slight uptick in inflation.
  • Fed members, including Chairman Powell, scheduled to speak today.
  • US equities struggle to maintain gains, with European markets faring better.
  • CME FedWatch Tool predicts a 82.5% chance of a 25 bps rate cut in December.
  • US 10-year benchmark rate hovers at 4.42% after hitting year-to-date high.

Amidst these developments, the US Dollar Index (DXY) remains in focus:

US Dollar Index Technical Analysis: Charting the Path Ahead

The US Dollar Index (DXY) continues its ascent following the confirmation of Republican control in Congress. With the possibility of a December rate cut still uncertain, the index is poised to test key levels:

  • Upside potential: A breach of 107.35 could lead to a new yearly high.
  • Downside support: Key levels at 105.89 and 105.53 may prevent significant declines.

US Dollar Index: Daily Chart

US Dollar Index: Daily Chart

Central Banks FAQs: Understanding the Basics

Central banks play a crucial role in maintaining price stability and managing inflation. Here are some key points to grasp:

  • Policy rate adjustments influence savings, lending rates, and economic activity.
  • Central banks aim to keep inflation around 2% through monetary policy.
  • Board members have varying views on monetary policy, categorized as ‘doves’ or ‘hawks’.
  • Chairman’s role includes consensus-building and communication of monetary policy decisions.
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